Shifts in IT start-up space

An avid participant at a tele-presence event organised some time ago in CII, Chennai, was Shradha Sharma, founder of the Bangalore-based YourStory.in (http://bit.ly/F4TShradhaS). Reconnecting with Shradha, about a week ago, Business Line brought up ‘IT start-ups' as the theme for discussion, triggered by her recent initiative, TechSparks.

Excerpts from the email interview.

Can you tell us the story behind TechSparks?

There has been a lot of buzz about entrepreneurship. While mapping entrepreneurship in YourStory from 2008, I found a huge challenge in the market when it comes to starting up and then scaling — especially in the product technology space.

At the ground level (beyond the launch euphoria), start-ups face difficulty on a day-to-day basis to build and sustain a product. Many good ideas/ventures have to shut shop because they do not have money, mentoring support, advisors, or client commitment.

This triggered the idea: Why not do something meaningful for these young ventures? With TechSparks, the whole emphasis is to give a national platform to product start-ups and enable their go-to-market strategy. TechSparks is thus not only about finding ventures from across India but handholding them to connect with their market – it could be through getting funding, corporate connect, mainstream media exposure, or just finding the right advisor.

Do you see any patterns in the IT start-ups in India?

In the last two years, the quantum of IT start-ups has substantially risen. Besides the obvious one, Bangalore, cities such as Ahmedabad, Kochi, Baroda, Coimbatore, Visakhapatnam and Kolkata are coming up with interesting IT start-ups.

Young entrepreneurs are ready to take the risk and pursue what they believe in. But in terms of infrastructural support to these IT start-ups, we are still way behind. Also, the market remains largely unorganised, and it is difficult for a start-up to access multiple resources/opportunities easily. On a positive note, many more seed funds and angel investors are operating today, which has increased the access to resources.

Slowly, the IT start-up ecosystem is shifting from the ‘outsourcing' space to ‘product' space. It is still hard to start a product company in India, and then sustain and scale it. But, at least now, with more investors/angels/VCs coming up in India, this space is picking up. However, we need more proactive efforts from all the stakeholders to make the pace comparable with the West.

I see a lot of young people showing interest in the app development space. Mobile, cloud and e-commerce start-ups are certainly on a high rise.

Would you like to list the top three-four challenges faced by our IT start-ups?

a) Money: Product start-ups need a substantial investment in the early days, and it is a big challenge to get the initial support. Lack of financial support remains one of the biggest drawbacks of the product start-up ecosystem. This leads to many product start-ups shifting to servicing to sustain themselves; it is not necessarily a wrong way, but definitely it splits the focus.

b) Genuine guides/advisors: I have emphasised on the genuine advisors because the noise which the start-up ecosystem is making is leading to many opportunists entering the bandwagon. They look at monetisation, taking equity from start-ups, etc, without building genuine value. What start-ups need is a lot of ground-level support on making their idea/product more competitive and hence the need for sectoral experts.

c) Marketing support: Purely from a product start-up perspective, most of the tech firms do not have the resources to promote their product. Also, being mostly run by techies, these ventures seriously need marketing/communication and PR support – and, yes, at a low cost.

And also your suggestions on the possible antidotes?

Create start-up apex bodies that are run by successful entrepreneurs who are purely committed to supporting start-ups. Like FICCI and CII, we should have a start-up body which then has a wing in every city – it should be self-sustainable and be a democratic set-up.

Government should create more programmes and support centres for start-ups rather then just putting money in government college-run incubators — (on a lighter note, they should also monitor their ROI in all these incubators).

HNIs and NRIs should actively become angels like in the West. In India, the affluent class is rising and every sector has a set of HNIs and people with extra cash. Rather then investing in gold and stocks, this class of people should invest in start-ups. Increasingly, people will then realise that investing in a start-up is long-term but sensible investment. It is a common practice in the West and this is something we need to embrace here.

More than any kind of inclusion, what we need as a nation is inclusive information — access to information/opportunities — and this is most relevant for start-ups. If industry bodies, government and individual organisations work towards making information accessible to start-ups it would be a great leap. For example, many industry/sector reports are so expensive that start-ups cannot have access to them; also, there is no feedback mechanism for entrepreneurs to gauge why their business plan got rejected or was not funded, why they could not bag a contract. Feedback will enable start-ups to improve and scale up faster.

If you were to distil the critical success factors of IT start-ups, what would they be?

Observing this space for the last three years, I would say there is the visible shift in attitude. Earlier, we were not very sure of ourselves; in most cases, we were apologetic and constantly bringing forth our failings/ shortcomings. Today, start-ups are much more confident and want to create for the domestic market rather than the West. They are leaving high-paying jobs to pursue their dreams. Mindset is very global and there is a sense of pride. The hunger is to be as big as a Facebook or Twitter now.

Innovative idea, funding and a founding team with a strong technical skill-set, a great go-to-market strategy are some of the factors that determine the success of the start-up.

But the most important criterion for success is the entrepreneur behind the venture.

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